Trenton developer slapped with 25-count indictment

TRENTON — The capital city can’t seem to shake July 18 as a day of infamy.

A year to the day after the FBI raided Mayor Tony F. Mack’s house, the feds have turned over another stone.

City developer Robert Kahan, 67, of Sunny Isles Beach, Fla., was indicted Thursday on 25 counts for allegedly diverting funds from three Trenton affordable housing projects for his owns use. The charges include 10 counts of false statements on a loan application, three counts of bank fraud, three counts of mail fraud, two counts of fraud against a local government (Trenton) receiving federal benefits and seven counts of transacting in criminal proceeds.

The two counts of fraud against a local government include the Southwest Village II Project and the Catherine S. Graham “Magic Marker” Project.

Palmer has remained adamant that the probe had nothing to do with him or his prior administration. He claims he has never been contacted by the FBI in regards to the matter.

The former mayor reiterated those comments Thursday before the indictment was handed down.

“If it was about me or I was involved in any way, I would have been subpoenaed, something would have happened to me,” Palmer said. “If it was about me, you think they would give me time to do stuff or try to get rid of stuff?”

Palmer wouldn’t say if he was surprised by Thursday’s indictment, but said the projects Kahan did for the city were “very good.”

“He did great work,” he said.

A federal subpoena served in December 2012, demanded the city hand over any documentation, correspondence, memoranda, reports and emails that may link Kahan with how limited liability companies spent public and private funds to finance the five housing projects in Trenton.

Last week, the FBI was still on Kahan like a hellhound on his trail.

Speculation ignited after Walter Denson, the city’s Housing and Economic Development director, divulged to The Trentonian that the last time the FBI reached out to him regarding Kahan was “several days ago.”

Shortly after FBI agents paid a visit to city hall to meet with officials from the Housing and Economic Development office.

“As alleged in the indictment, Kahan took money intended for projects designed to help those in need of affordable housing and used it for his own ends,” U.S. Attorney Paul Fishman said in a statement. “It isn’t just defrauded financial institutions and programs that lose: it’s the people of our cities who are the most vulnerable. They can’t afford it, and we won’t stand for it.”

According to the indictment, Kahan, of Trenton-based Tara Developers, received both private and public funding for the Canal Plaza Homeownership Project, the Southwest Village II Project and the Catherine S. Graham Project between 2006 to 2010.

When seeking loans for the city housing projects, Kahan allegedly falsely overstated the value of his assets.

Kahan also falsified payment applications when requesting loan advances with the three Trenton projects, by stating that all money he was previously granted had been used to pay costs for labor, materials and other obligations, according to court documents.

Once he had access to the funds, Kahan allegedly squandered a substantial amount of the money for his own personal use, his other development projects and other unauthorized uses.

Current Mayor Mack is not involved with the Kahan investigation, but he is facing his own legal troubles.

A federal grand jury in December returned an eight-count indictment charging Mack, his brother, Ralphiel Mack, and Mayor Mack’s close associate, Joseph A. “JoJo” Giorgianni, with extortion, bribery, and mail and wire fraud.

Mack and his co-defendants pleaded not guilty to the charges, which stem from an alleged scheme to accept $119,000 in bribes in exchange for using the mayor’s influence over the development of a parking garage on city-owned land.

That trial ­is expected to begin Jan. 6.

The same FBI plot that baited Mack into alleged corruption was unsuccessfully attempted against the Palmer administration during the former mayor’s last term in office, according to former city officials.

At the end of 2008 into 2009, two of the FBI’s cooperating witnesses tried to sell a bogus parking garage plan to Palmer’s administration. Jerry Harris, a former economic development director for Palmer, said his talks with an FBI cooperating witness led to nothing.

“Believe me, if somebody could get something on me, they damn sure would have,” Palmer said Thursday. “They would love it.”

When asked if Kahan’s indictment will taint his administration, the mayor who served from 1990 to 2010 responded, “Why would that?”

“He built houses in other municipalities too.”

According to Tara Developers’ website, the company has also worked on projects in Philadelphia and other municipalities throughout New Jersey.

“In 2004 Tara Developers received the Historical Preservation Award from the City of Trenton and in 2008 they received ‘The Governor’s Award’ for Excellence in Housing for outstanding preservation/revitalization effort in the city of Trenton,” the company’s website states. “Tara Developers also received the 2009 ‘This Place Matters’ Historic Preservation Award from the City of Trenton and the Trenton Landmark Commission for Historic Preservation.”

Kahan’s court date has yet to be set.

The false statement in a loan application, bank fraud and mail fraud counts each carry a maximum sentence of 30 years in prison and a $1 million fine. The charges of fraud against a local government receiving federal benefits and transacting in criminal proceeds each carry a maximum potential sentence of 10 years in prison and a $250,000 fine.

Efforts to reach Kahan and his attorney, Ewing-based Scott Krasny, were unsuccessful.